Considering the EU's targets for transitioning to climate neutrality, energy security, and combating energy poverty, and in light of the national obligations associated with these targets, Romania has made significant strides in this direction, particularly before and after the entry into force on November 20, 2023, of Directive (EU) 2023/2413, which amends Directive (EU) 2018/2001, Regulation (EU) 2018/1999, and Directive 98/70/EC regarding the promotion of energy from renewable sources.
Romania plans to continue these efforts in the future, as outlined in the Romanian Energy Strategy 2025 - 2035, with a perspective towards 2050.
For more detailed information on the amending Directive, click here.
Below, we selectively present a retrospective of important events in Romania from 2023-2024, approximately halfway through the transposition period for obligations set out by Directive (EU) 2023/2413.
1) CONTINUATION OF INITIATIVES TO FACILITATE AUTHORIZATION OF RENEWABLE ENERGY PROJECT INVESTMENTS STARTED IN 2022
Sequence of Regulations:
This law, initially applicable until December 31, 2026, allowed:
The use/authorization for agricultural land outside the city limits under 50 hectares, in categories such as arable, pasture, vineyards, and orchards, as well as land with improvement works from fertility classes III-V for placing specific investments in renewable energy production (solar, wind, biomass, bio-liquid, biogas) without requiring prior urban planning documentation - PUZ.
The permitted investments are not limited to production capacities but also cover storage units, transformer stations, or similar systems.
Except for arable land, other lands can be used in a dual system - partially/rotationally for their original use and for the referred energy purposes.
The realization of the works is conditioned upon obtaining a construction authorization and the decision to remove the land from agricultural use, either permanently or temporarily.
The decision to remove land from agricultural use, conditioned by the payment of the respective fee, must be issued within 45 days of receiving the request.
For areas larger than 1 hectare, the decision issuance is also conditioned by the approval of the Ministry of Agriculture and Rural Development.
2) LAUNCH OF THE CfD SUPPORT SCHEME – CONTRACTS FOR DIFFERENCE - IN 2024
On March 25, 2024, the launch event for the Contracts for Difference (CfD) Mechanism took place, for a horizon of 15 years.
Regulatory Framework: Government Decision no. 318/2024 approving the general framework for implementing and operating the support mechanism through contracts for difference for low-carbon technologies, effective from April 10, 2024.
Main Goals: Long-term predictable revenues for producers and encouraging investments in renewable energy, with eligible production technologies including: a) onshore wind resources; b) offshore wind resources; c) photovoltaic solar resources; d) hydro resources; e) nuclear resources; f) hydrogen; g) energy storage.
The scheme covers a total capacity of 2 GW for the first auction.
Initially, this capacity was equally allocated between onshore wind and solar-photovoltaic sources, with the European Commission approving a 3 billion euro aid scheme to stimulate and support investments in this direction.
Recently, the Minister of Energy announced a one- to two-month postponement of the first round of CfD auctions from September 2024 for adjustments in capacity allocation, with an increase in the share for wind energy.
For the second auction in 2025, the targeted total capacity is 3 GW. The initial allocation announced for this second auction is equal between onshore wind and solar-photovoltaic sources, with no exclusion of potential future changes.
TWO SUPPORT MECHANISMS:
A. CfD Auctions, with the Electricity and Natural Gas Market Operator - OPCOM S.A - as the CfD counterparty and TSO Transelectrica as the auction operator. The administrative costs involved in their activities will be reflected in the invoices issued by suppliers to final consumers.
Eligibility criteria, capacity objectives, maximum strike price, bidding procedure rules, and other ancillary aspects will be fully known at the time of issuing the CfD auction initiation order by the Ministry of Energy.
Following the auctions, CfD contracts will be concluded, based on which CfD differences will be paid, either from the CfD Counterparty to the Beneficiaries or from the Beneficiaries to the CfD Counterparty, depending on the relationship between the Price in the bilateral contracts concluded by the CfD Beneficiaries*, the Reference Price**, and the Strike Price***.
Regarding the *Price in the Bilateral Contracts, it should be noted that for all quantities produced by the capacity targeted by the CfD contract, the CfD beneficiaries are obliged to deliver to the National Energy System and sell only on organized markets, except for quantities used for technological self-consumption of internal services powered by the beneficiary's generators.
**Reference Price - established based on the formula agreed in the CfD Contract and the methodology approved by ANRE - the methodology has not yet been adopted.
On July 17, 2024 were adopted ANRE President's Order no. 51/2024 approving the Methodology for determining and collecting the contribution related to contracts for difference (CfD), being published in the Official Gazette and in force from 29.07.2024. and ANRE President's Order no. 52/2024 concerning the framework contract between the CfD Counterparty and the CfD contribution payer for collecting the CfD contribution and the framework contract between the CfD Scheme Operator and the CfD Counterparty being published in the Official Gazette and in force from 26.07.2024
***Strike Price- determined by CfD auction and cannot exceed the maximum price established by the CfD auction initiation order.
B. AD-HOC STATE AID, for eligible production technologies ineligible for CfD auctions/competitive selection, granted based on a CfD contract awarded, negotiated with the CfD beneficiary, by the relevant ministry with the support of the CfD counterparty and concluded by the CfD counterparty with the CfD beneficiary.
CfD schemes must be approved by a state aid authorization decision issued by the European Commission.
3) LEGISLATIVE INITIATIVES TO SUPPORT PROSUMERS AND MODERNIZE PRODUCTION REPORTING
Prosumers remain a point of interest for both private and public actors, and the trend is predictably to intensify in this direction, given their increasing number and new regulations supporting and expanding their role in achieving European and national targets brought by Directive (EU) 2023/2413.
At the end of 2023, the total number of prosumers was 110,355, with a total installed capacity of 1,442,844 kW - including 95,205 individuals with a total installed capacity of 611,451 kW and 15,150 legal entities with a total installed capacity of 831,393 kW.
These figures are almost entirely correlated with the photovoltaic solar source.
As of February 29, 2024, the number of prosumers was 117,154, with an installed capacity of 1,554.47 MW. According to ANRE estimates, maintaining the growth rate of prosumers could lead to a number of 200,000 prosumers by the end of 2024.
In November 2023, the Chamber of Deputies, as the Decision-Making Chamber, adopted the Law to amend and supplement Law no. 123/2012 on electricity and natural gas, and to amend art. 319 para. (10) lit. d) of Law no. 227/2015 on the Fiscal Code.
As of the date of this article, the Law, sent for promulgation, has been returned for re-examination and debates in Parliament.
In 2024, an attempt was made to implement the obligation for prosumers to install a second meter, with the declared purposes of facilitating and ensuring the accuracy of energy production reporting for applying the existing compensation/settlement mechanisms and tracking the achievement of European and national targets. The installation would be ensured by distribution operators, and the costs included in the distribution tariff.
The initiative faced strong opposition from prosumer associations, leading ANRE to announce a temporary suspension of the installation in April 2024, but specifying that the installation of Smart Metering Systems would resume to meet the levels set by the 2019-2028 Smart Metering Implementation Calendar, approved by ANRE President's Decision no. 778/08.05.2019.
4) FUNDING PROGRAMS – RUNNING IN 2023-2024 (as exemple, not limited to)
Casa Verde/Green House Photovoltaic Program
A multi-annual program run by the Environmental Fund Administration, providing 20,000 lei in funding, with a minimum own contribution of 2,000 lei, for the purchase and installation of photovoltaic systems with a minimum power of 3 kW, for self-consumption and delivery of surplus to the national grid, through previously validated installers.
The program adresses Romanian residences and cult units.
Although the program was blocked in 2023 due to legal proceedings, and settlements were delayed, the high number of applications, which practically exhausted the allocated budget within the first few minutes of the application session opening, indicates growing interest in this direction.
In 2024, the program will be resumed, with the AFM president estimating August-September 2024 for this.
The allocated budget for this year will be 2 billion lei, the largest so far.
Electric Up Program
According to GEO 39/2024, the program will run until 2032.
Funding for SMEs and the hospitality industry for:
In the sense of the Electric Up de minimis aid scheme, SMEs are enterprises with fewer than 250 employees, with an annual turnover not exceeding 50 million euros and/or an annual balance sheet total not exceeding 43 million euros.
Funding is provided for integrated projects, with ElectricUp 2 targeting all four types of investments mentioned above. In ElectricUp 1, beneficiaries had the option to integrate or not the alternative heating/cooling systems.
Maximum funding - 150,000 euros per beneficiary, covering up to 75% of eligible expenses, with the remaining 25% co-financed by the beneficiary. The initial investment is made by the beneficiaries, and the funded amounts are reimbursed subsequently.
The scheme allows for requesting an advance of up to 30% of the total eligible expenses, with the prior presentation of a guarantee instrument issued according to the law by a banking or an insurance company.
Reimbursed amounts are directly proportional to the installed power.
Regarding ElectricUP 1, conducted in 2023, the Ministry of Energy declared at the end of the year that 1839 funding contracts were signed, of which 1500 were implemented, with a total value of almost 480 million lei.
For ElectricUP 2, the available budget will be between 450 and 596 million lei, with several modifications compared to ElectricUp1.
On June 4, 2024, the public consultation launched by the Ministry of Energy on the draft de minimis aid scheme under the "ELECTRIC UP" 2 program ended.
5) RAISING AWARENESS OF THE IMPORTANCE AND OBSTACLES IN THE PATH OF ENERGY COMMUNITIES
Since December 2022, we have had the internal legal framework transposing RED II for the functioning of energy communities - specifically GEO no. 163/2022 completing the legal framework for promoting the use of renewable energy, as well as amending and supplementing other regulations.
Renewable energy communities are voluntary, autonomous associations that can consist of citizens, SMEs, or local public authorities that do not directly seek profit for their members but aim to offer community economic, social, or environmental benefits to their shareholders or members or the local areas where they operate.
These communities (groups of prosumers and consumers) could share the produced electricity among themselves.
In addition to multiple advantages, energy communities can contribute to reducing electricity bills, as evidenced by European progress showing reductions of up to 60% compared to energy supplier prices.
The European legislative framework requires member states to encourage and facilitate their establishment and operation, but in Romania, efforts in this direction seem to have stagnated for a significant period.
At the beginning of 2024, in Romania there were only two such communities and several dozen others in the project stage, mainly initiated by local public authorities. The European trend, applicable in Romania as well, shows a predominance of solar energy renewable communities, with a small proportion of biomass in rural areas.
The main causes of this blockage - lack of dedicated funding schemes, technical and informational support.
Concrete steps were initiated by the Ministry of Energy only in April 2024, creating a working group for the development of energy communities in Romania and launching an invitation for interested entities to join the Group.
6) GREEN HYDROGEN
Aligned with European and global targets towards decarbonization and greenhouse gas reduction, Romania has made efforts to exploit the potential of green hydrogen (produced from water electrolysis using renewable energy sources, emitting no greenhouse gases during production or combustion) during the analyzed period.
It presents a versatile, carbon-free energy source, usable in both energy production and liquid and gaseous fuel production.
However, according to the European Commission, hydrogen represented less than 2% of Europe's energy consumption in 2022, mainly used in the petrochemical and fertilizer industries. 96% of this production comes from natural gas and generates significant CO2 emissions.
In Romania, gray hydrogen (produced from steam methane reforming) is currently a raw material used predominantly in heavy industries - refining, steel production, fertilizer production, and the chemical industry.
With the publication of the REPowerEU plan in May 2022, the European Commission raised Europe's ambition level regarding hydrogen, setting an European target for renewable hydrogen consumption of 20 million tons/year by 2030.
The European Hydrogen Strategy's agenda is currently structured into three phases over the 2020-2050 horizon:
First phase (2020-2024) – Activation - corresponds to the phase of developing the National Hydrogen Strategy and the Action Plans for its implementation.
In the direction of implementing reforms assumed through its National Recovery and Resilience Plan in this area, Romania has made significant steps in 2023, within the first phase of the European strategy.
On June 20, 2023, public consultations on the draft National Hydrogen Strategy and the Action Plan for its implementation 2023 - 2030 concluded.
On April 1, 2024, the Ministry of Waters, Environment, and Forests published Decision no. 2 of the classification stage, determining that the strategy and plan could have significant environmental effects, requiring the preparation of an Environmental Report and an Appropriate Assessment Study.
Briefly on the National Hydrogen Strategy:
In this sense, the general objectives aim to reduce carbon emissions by at least 2 million tons of CO2 by 2030 through the use of renewable hydrogen in industry and transport, and to create the necessary conditions for the production of at least 48.7 kt/year of renewable hydrogen by 2027 and 152.9 kt/year of renewable hydrogen by 2030, subsumed under the first objective.
Although the strategy also refers to residential heating through a low-percentage mix with natural gas, this potential use does not seem to contribute either to achieving neutrality targets or to reducing heating bills, requiring high-level infrastructure and security investments.
1. Bucharest – Ploiești – Târgoviște – Pitești
2. Constanța – Medgidia – Călărași – Slobozia
3. Cluj – Târgu Mureș – Sighișoara – Sibiu – Sebeș
4. Galați – Brăila – Tulcea
5. Craiova – Slatina – Târgu Jiu
Based on estimates of hydrogen demand for 2030, the strategy concludes:
At the same time, in Romania, in this first phase, the first calls for renewable hydrogen production projects within the National Recovery and Resilience Plan have been launched, and Law no. 237/2023 regarding the integration of hydrogen from renewable and low-carbon sources in the industry and transport sectors was adopted, effective July 23, 2023.
For the Second phase (2025-2030)** – Expansion – the EU objectives are:
7) INVESTMENTS IN ENERGY INFRASTRUCTURE
Romania's National Recovery and Resilience Plan includes significant investments in renewable energy infrastructure, focusing on improving grid connectivity and supporting electric transport. The plan allocates funds for modernizing the electrical grid, improving energy efficiency, and integrating renewable energy sources.
In this context, through the National Power Transmission Network Development Plan for 2024 – 2033, developed by Transelectrica – the National Electricity Transmission Company, a series of investments have been announced, including in correlation with the European Ten-Year Network Development Plan (TYNDP). In 2024, several significant financing contracts were signed in this regard.
